Overhauling the global tax system and its practices is fundamental if we are to deliver stronger, cleaner and fairer growth for a post-Crisis world. The Secretary-General explains how the OECD, with the support of the G20, is finding ways to fix the current international tax situation.

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The OECD does not see deflation taking hold in the euro area, but the risk has risen.

©LucyNicholson/Reuters

This working paper argues that some of the technologies associated with crypto-currencies are very interesting and may one day become a serious disruptive technology for financial intermediaries—but that these technologies should be thought about separately from the crypto-currencies like Bitcoin that have some very dubious uses.

The Australian economy has been one of the OECD’s best performing economies, though it now faces some major challenges.

G20 countries are taking action to lift growth in the world economy. Will their commitments be enough?

OECD Chief Economist Catherine L. Mann © OECD/Marco Illuminati

The world economy remains stuck in low gear, and a "stronger policy response" is needed, particularly to boost demand in the euro area, OECD Chief Economist Catherine L. Mann said today, 25 November.

Australians are well-known for being a sports-mad people. Some 43% of the adult population attended at least one sporting event in 2009-10 and national pride is often rooted in the latest successes of its national sports teams and international sports stars. Beating the All Blacks in rugby union (a rare event these days) or the English in cricket (a more even match) will significantly lift the national mood. After Australia II won the America’s Cup sailing race in 1983, Prime Minister Bob Hawke famously declared an effective public holiday: “Any boss who sacks a worker for not turning up today is a bum.”

How much of a country can you count? The newly updated Understanding National Accounts from the OECD answers this question and gives a summary of how to calculate the accounts as well as the principles and data sources behind them.

Angel Gurría, Secretary-General of the OECD © OECD Flickr

“Life is full of alternatives but no choice.” G20 leaders at the summit in Brisbane, Australia, in November should reflect on these words by Australian writer Patrick White, a Nobel Laureate, as they prepare their economic strategies for the years to come.

© Andre Dobroskoy/ Under license from Shutterstock

Over the past few years we have witnessed some challenging times. When Australia took the reins of the G20 presidency nearly a year ago, the global economy was still recovering from one of the most severe recessions of modern times.

©Andrew Biraj/Reuters

As G20 leaders look distraught at a global economy that is faced with weak growth, high unemployment and rising income inequality, they should repeat to themselves that this is not inevitable. The International Monetary Fund (IMF), while putting out another downward revision of growth forecasts, admitted that recovery is too slow and fragile, while recognising the problem of income inequality. The OECD, in its reports on New Approaches and Economic Challenges (NAEC) and its 2014 OECD Employment Outlook, acknowledges that rising inequality affects economic growth and social cohesion, sapping trust in markets and institutions.

Heather Smith, Australian Sherpa to the G20 ©G20 Australia

Each G20 presidency faces its own challenges. A presidency must respond to global economic conditions, it must build on previous work, and it must seize opportunities to progress with reforms where members can reach consensus.

Gabriela Ramos, OECD Chief of Staff and G20 Sherpa ©OECD

The Australian G20 presidency has made a critical and decisive contribution to reinforcing the effectiveness and impact of the Group of 20 (G20). Under Australia’s chairmanship, the work of the G20 has gained in coherence and strength, which should reinforce our joint efforts to boost and sustain future growth. Our organisation is proud to have contributed significantly to these achievements.

©Brendan McDermid/Reuters

Global economy faces slower future—

A slowdown in global economic growth and a continuing rise in income inequality are projected for the coming decades, according to a new OECD study, Policy Challenges for the Next 50 Years. Ageing populations and the gradual deceleration of growth in the large emerging economies will bring global rises in GDP down from an annual average 3.6% in 2010-20 to 2.4% in 2050-60. Innovation and investment in skills will be the predominant drivers of growth. Climate change is also a factor, and Policy Challenges for the Next 50 Years says unless CO2 emissions are reduced, climate change could curb global GDP by 1.5% by 2060 and by nearly 6% in South and Southeast Asia. Technical advances will raise demand for high-skilled workers. Without a change in policy, OECD countries would face a further large increase in earnings inequality by 2060, bringing them close to the level seen in the US today. Rising inequalities threaten growth, most notably by blocking economic opportunities. See http://oe.cd/Cn

©David Rooney

Reconciling work and family commitments is a challenge in every country, but particularly for Japanese men and women. Much more so than in most other OECD countries, men and women have to choose between babies and bosses: men choose bosses, women less so, but on the whole there are very few babies and there is too little female employment. These shortcomings are increasingly coming to the fore and will have to be addressed.

Angel Gurria, Secretary-General of the OECD

International investment treaties are in the spotlight as recent articles in the Financial Times and The Economist show. An ad hoc investment arbitration tribunal recently awarded $50 billion (€40 billion) to shareholders in Yukos. EU consultations on proposed investment provisions in the Transatlantic Trade and Investment Partnership (TTIP) with the United States generated a record 150,000 comments. There is intense public interest in treaty challenges to the regulation of tobacco marketing, nuclear power and health care.

©Reuters

Some 50 years ago, Japan entered into the period of post-recovery after the Second World War, while consolidating its path for economic growth and making a comeback on the international scene. Japan’s accession to the OECD was symbolic in that respect. Another symbol was the Tokyo Olympic Games, which triggered a transformation of Japan’s international image, thanks to improvements in its physical infrastructure, transportation systems and services. A new expressway network had been built across Tokyo, the new Shinkansen high-speed “bullet” train now relayed Tokyo and Osaka in four hours, and television began broadcasting in colour.

The recovery from the Great Recession has been slow and arduous, and has at times threatened to derail altogether.

Reinhard Cordes, Managing Partner, ONLYGLASS GMBH

A promising policy to increase employment and foster social inclusion is the promotion of business creation by the disadvantaged. The potential residing amidst disadvantaged groups such as women, seniors, youth, migrants, unemployed or people with disabilities is enormous. Several methods are available to make this potential a reality. 

The world’s first ATM cash machine opened in Vancouver in October 2013, offering Bitcoin conversion to and from Canadian dollars. As the global use of Bitcoin continues to increase, governments around the world have both greeted and shunned the anonymous digital crypto-currency. The US and Canada treat Bitcoin as a taxable and tradable commodity, akin to stocks and capital assets (though in June 2014 California removed a ban on using currencies other than the US dollar, which could boost confidence in such alternative payment methods). Meanwhile, China has forbidden Bitcoin outright, while France, Germany and Korea do not recognise its legitimacy.

Your report on Germany proposes raising capital gains taxes on residential real estate (except for owner-occupied housing) to promote equity of income distribution and government revenue (OECD EconomicSurveys: Germany, May 2014, see www.oecd. org/germany).

©Brendan McDermid/Reuters

When the worst crisis in over 50 years struck OECD countries in 2008, people rightly asked why they had not been warned. After all, the information world is awash with economists, global traders and other experts watching the markets, and international organisations such as the OECD and the IMF are tasked with what is known as economic surveillance. Yet, as the former OECD chief economist, Klaus Schmidt-Hebbel, wrote in the OECD Observer (No 269 October 2008), Lehman Brothers’ collapse came as a shock to economists and market participants as well. How did they all get it so wrong?

Japan may be on the cusp of a fresh wave of “cool entrepreneurship” that could turn the country’s creative industries into a new source of growth. 

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While today Japan is one of the world’s largest and most advanced economies, a member of the G7 and the most developed country in Asia, in 1964 the picture was quite different.

Haguiwara Toru and Thorkil Kristensen, Memorandum of Understanding to join the OECD, signature of the Convention, in the OECD Observer No 6, October 1963, page 3 ©OECD

OECD membership crowned Japan’s efforts to reintegrate into the international community after the Second World War, while helping to turn the organisation into a global, rather than European, player. But the country’s accession had to be managed with great care, reflecting tensions of the time. 

©David Rooney

After two decades of sluggishness, a recovery could be under way. This time, it could be sustained.

Small and medium-sized enterprises refers to firms of up to 250 workers each, but did you know that these so-called SMEs make up some 90% of employment in the OECD area? 

After a euphoric decade, reforms to consolidate recent gains and confront challenges ahead are needed. Are Latin America’s economic fortunes changing? Over the last decade, policymakers and the general public became used to good news from this lively continent. Latin America was abuzz with optimism, buoyed by strong growth and rising incomes.

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Optimism has proved to be another major victim of the economic crisis, according to How’s Life? Indeed, people’s long-term expectations about their subjective well-being fi ve years from now have deteriorated almost everywhere in the OECD area. And most of them don’t expect things to get much better. 

©David Rooney

The global campaign will continue in 2014 to improve international tax rules, many of which were first designed over a century ago, and to make them fit for the era of globalisation and new technologies. In 2013 policy attention was focused on the problem of profit shifting by global firms and its negative effects on tax bases, with the OECD issuing its widely publicised 15-point Action Plan on Base Erosion and Profit Shifting (BEPS) to leaders at the G20 summit in September. A key action area in the plan concerns crossborder tax hybrid schemes, with an OECD report due to address the problem in 2014. How do they work? 

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